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RICS APC - Autumn 2023 > Project Finance > Flashcards

Project Finance Flashcards

1
Q

What is the difference between value engineering and value management?

A

Value engineering - Retrospective
Value Management - Proactive.

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2
Q

How would typically control cost through a project?

A
  • Appoint QS.
  • Proactive value management approach
  • Regular reporting
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3
Q

How do cost estimates assist with the control of cost through a project?

A
  • Provide an estimate of cost at key junctures
  • Allow client to understand cost against budget
  • Allow for further decisions to be contextualised against estimate and budget.
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4
Q

What are preliminaries?

A

Costs that are essential for the completion of a project, but aren’t reflected in the finished build

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5
Q

Could you please provide an example of preliminary costs?

A
  • Temporary lighting
  • Labour cost
  • Site insurance
  • Welfare
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6
Q

What is overheads and profit?

A
  • Cost for contractor to make profit and pay bills.
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7
Q

What is typically the OH&P percentage on jobs you are involved with?

A
  • 3 - 7.5%
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8
Q

Who typically manages the professional team fees for the projects you are involved with?

A

Project Manager

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9
Q

What is the current cost of construction inflation?

A

4.2% as of June 2023.

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10
Q

What is a cashflow forecast?

A
  • Table
    -Shows expected valuation amounts for the project.
  • Generally calculated monthly.
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11
Q

What shape is a cashflow forecast for a fit-out project

A
  • S graph
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12
Q

What is the shape of a cash flow forecast for a Cat A Refurb?

A
  • Bell curve.
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13
Q

What are some key elements of the RICS cost reporting guidance note?

A
  • Purpose of cost reporting
  • Treatment of variations
  • Risk allowance management
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14
Q

What is contingency?

A

A sum held within a clients budget to pay for any discoverable / change when on site.

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15
Q

What percentage contingency do you typically have on a project?

A

Changes through the deign stages but typically 7.5%

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16
Q

What is a defined provisional sum?

A
  • Described in sufficient detail
  • Contract makes a prelim allowance.
  • Allowed for within programme.
17
Q

What is an undefined provisional sum?

A
  • Insufficient detail
  • Not allowed for within programme or prelims.
18
Q

What is CIS?

A

Construction industry scheme, main contractor pays subbies tax directly to HMRC.

Any contractor or client that spends over £3m a year on construction works needs to be registered.

19
Q

on Cat A Finsbury Circus, why did your architect not raise earlier their concerns on the soffit quality?

A
  • Raised early at Stage 3.
  • Question from me following similar issue on another job.
20
Q

What remedial works were required to be undertaken to the soffit?

A
  • Infills
  • Strip out over existing fixings
21
Q

How did the QS determine a suitable budget figure for the remedial works to the soffit?

A
  • Benchmarking
  • Engaging with a sub-contractor.
22
Q

What is a provisional sum

A

A sum within the contract to account for works where not enough information is provided to provide a firm sum.

23
Q

When expending against the provisional sum, how did you ensure these works were being costed fairly?

A
  • Contractor priced a survey of the infills required.
  • QS reviewed against cost
  • Three sub-contractor quotes receieved.
24
Q

Could you please outline some ways in which valuations can be undertaken on projects?

A
  • Against works progress on site.
  • Stage payments (agreed at outset)
  • Milestone payments
25
Q

Could you please provide a summary of the Housing Grants, Construction and Regeneration act?

A
  • Staged / interim payments if duration over 45 days.
  • Right to suspend performance for non-payment.
  • Disallowing pay when paid clauses.
26
Q

What was the average construction cost inflation for 2022?

A

15%

27
Q

Was there a risk of programme delay as a result of the expending this provisional sum and associated works?

A
  • Highlighted on risk register.
  • Contractor surveyed as part of site set up to determine level of works required and associated cost.
28
Q

What would you check if he heard a company you were dealing was insolvent?

A
  • Check companies house.
  • Clients Legal Advisor
29
Q

What is insolvency?

A

an individual or company can no longer meet their financial obligations to lenders as debts become due

30
Q

What is the difference between administration and insolvency?

A
  • Adminstration - Adminstrators will run the business in an attempt to return it to profit.
  • Insolvency - the overall banner of not being able to pay lenders
31
Q

What does BCIS stand for?

A
  • Building cost information service

RICS APC - Autumn 2023 (22 decks)

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